Amazon increases minimum wage for UK and US workers

Retailer has come under scrutiny for its worker conditions

An Amazon warehouse in New jersey.

An Amazon warehouse in New jersey.

 

Amazon is increasing the minimum wage paid to US and UK workers, passing on some of the spoils of its rapid expansion to staff in the face of criticism over how the ecommerce group treats its employees.

Jeff Bezos, chief executive, said the company had “listened” to its critics on Tuesday as he announced that new wage floors – $15 (€12.92 )in the US and £9.50 (€10.66)in the UK, with a higher £10.50 rate in London – would go into effect next month.

About 250,000 regular employees, as well as more than 100,000 seasonal workers hired for the festive shopping season, would benefit in the US, the company said. In the UK, about 17,000 employees and 20,000 temporary staff would be paid more.

Amazon has come under scrutiny for its worker conditions, especially as it has enjoyed greater financial success. Last month it became the second US company in history whose market capitalisation topped $1 trillion.

Protests

Warehouses have been the subject of long-running protests about insecure work and poor conditions. Workers in Spain and Germany went on strike earlier this year.

US senator Bernie Sanders said last week that there was “no reason” why the company could not pay its workers $15 an hour, comparing the fortunes of workers with Mr Bezos, the world’s richest person.

Amazon is also facing market pressures to pay employees more. Economic expansion and a tightening of the labour market in recent months have left companies competing more aggressively to hire staff.

Retailers have reported shortfalls in lower skilled workers in parts of the US and are having to sweeten pay deals. Walmart, the world’s biggest bricks-and-mortar retailer, earlier this year increased its minimum hourly wage in the US from $9 to $11.

Across the wider US economy, average hourly earnings of non-farm employees increased in August at the quickest rate in nine years, according to the latest labour department data.

Existing pay rates at Amazon vary by area, although its lowest hourly wages in the US start at around $11.

The new rate is more than double the US federal minimum wage of $7.25, although 29 US states and Washington DC have requirements that exceed that level.

Mr Bezos said on Tuesday: “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead.”

Lobby

Amazon also said on Tuesday that it would lobby the US government to increase the federal minimum wage.

“We intend to advocate for a minimum-wage increase that will have a profound impact on the lives of tens of millions of people and families across this country,” said Jay Carney, senior vice-president of Amazon global corporate affairs.

The rate being offered by the company in the UK is above the current national living wage for over-25s of £7.83. It is also higher than the £9 an hour that the government has pledged as a national living wage by 2025.

As in the US, minimum wage legislation and high employment levels have pushed pay rates higher in Britain. UK retailers must also contend with the country’s looming departure from the EU and its uncertain impact on the 170,000 EU nationals currently working for UK retailers.

Some retailers have tried to mitigate the impact of higher per-hour rates by changing other aspects of working conditions, such as overtime rates or paid breaks.

– Copyright The Financial Times Limited 2018